The Global Wind Energy Council (GWEC) published its “Global Wind Report 2022” on April 4, 2022. REGlobal provides an extract of the report covering the Chinese wind power market…
China has been the world’s largest wind market by installed capacity since 2010. The continued growth of wind in China over the past decade is mainly due to ambitious policies from the central government. 2020 was a record year, with more than 54 GW of installations primarily driven by the expiration of the onshore wind FiT. Although onshore wind growth slowed down last year, China retained strong momentum in 2021. According to the National Energy Administration (NEA), 47.5 GW wind capacity was grid-connected in 2021, making it the second-best year in the country’s history. Of these new installations, 16.9 GW is offshore wind – a record in the global offshore wind industry, and nearly three times the volume of new offshore wind installed worldwide in 2020. This explosive growth was similarly driven by the deadline for projects to access an offshore wind FiT, under a policy released by the National Development and Reform Commission (NDRC) in 2019.
A new era for the Chinese wind industry
After a decade of rapid growth, China’s renewable market has entered a new stage. Support for renewables has shifted from a FiT model to a “grid parity” model, where renewable-generated electricity will receive the same remuneration as coal-fired power plants. Starting from January 1, 2021, all onshore wind projects shall reach grid parity. From 2022, the central government will cease subsidies for offshore wind, although a small portion of financial support will be offered by provinces like Guangdong and Zhejiang for the next 3-4 years to support offshore wind’s journey to grid parity by 2025. In certain sea areas, the government is confident that grid parity can be achieved even before 2025.
China is also the world’s largest wind turbine manufacturing hub, accounting for 60-65% of global production of turbine nacelles and key components including gearboxes, generators and blades. There are still 20 turbine manufactures active in the Chinese wind market today. During the transition to the era of grid parity, manufacturing competition in China has become increasingly fierce, reflected in record-low bidding prices in 2021. At the start of 2022, price competition has become even more intensive with turbine prices including towers dropping to $316/kW for onshore wind and $632/kW for offshore wind. Price pressure also drives technology innovation. Chinese wind turbine OEMs continue to launch new turbines with greater power ratings and bigger rotors for the domestic market. At China Wind Power 2021, co-organised by GWEC, local turbine OEMs released nearly 40 new models, with the majority of onshore products in the 5-7 MW size range and offshore turbines in the 12-16 MW range.
The 14th Five-Year Plan paving the road to “30-60” targets
To reach the “30-60” target (peak emissions by 2030 and carbon neutrality by 2060) on time, the Chinese government has made a comprehensive plan to accelerate the development of renewable energy. By the end of the 14th Five Year Plan period (2021-2025), the share of renewable energy in total power generation capacity is set to exceed 50%. The key measures outlined by the NEA to support wind power development in this period include:
- In northern China, development will focus on the Gobi and various other desert areas and efforts will be made to increase transmission capabilities and local consumption of renewable energy. Existing coal-fired power plants in the region will be upgraded to support balancing the grid system. Seven giant onshore wind/solar bases are planned. In 2021, the construction of the first phase of a renewables base, totalling 100 GW, kicked off, and applications for the second phase opened at the end of the year.
- In southwest China, combined with the development of hydropower, projects which integrate hydropower, wind and solar will be coordinated. Two giant energy bases will be constructed.
- In the eastern coastal areas, offshore wind clusters will be promoted with large-scale offshore bases (10 GW level). The five selected offshore bases are in Shandong Peninsula, Yangtze River Delta, Southern Fujian, Eastern Guangdong and Beibu Gulf.
- In the central and southeast regions, distributed wind projects will be promoted, especially in villages in the vast rural areas. It is estimated that 5,000 villages will be selected and 10,000 turbines, totalling 50 GW, will be installed by 2025.
- In areas with high-quality wind resources and existing installation, upgrading and repowering of aging wind farms will be implemented to increase efficiency and Annual Energy Production (AEP).
In addition, to promote technological innovation the government plans to support demonstration projects such as deepwater wind, high-efficiency solar cells, energy islands, largescale renewable hydrogen, hybrid energy solutions and smart micro-grids.
Power market reform for a renewables-led revolution
To build a power system fit for the renewables-led energy transition, the government has recently launched plans for power market reform. In January 2022, the NDRC and NEA jointly released guidelines for accelerating the establishment of a unified national electricity market. This directive contains various short-term and long-term orders, including the initial build of a nationwide single power market to facilitate China’s energy transition under its climate goals by 2025, and completion of the market development by 2030. Efforts will be made to enhance the adaptability of the electricity market to a high proportion of new energy sources, according to the guidelines, which also urge the strict implementation of laws, regulations and policy measures to promote the participation of new energy in market transactions. Under the system, the national, provincial and regional markets will operate collaboratively, with significant improvements in cross-provincial and cross-regional market allocation of resources and green power trading. End-users will be able to directly purchase green electricity, and grid enterprises will prioritise the implementation of direct renewable power procurement.
China in pole position for global wind power growth
Following the “30-60” pledge made in September 2020, the Chinese government updated its NDC commitment to achieve 25% non-fossil fuel generated energy in the primary energy mix and boost its solar and wind capacity to more than 1,200 GW by 2030. Following this example, China’s major state-owned power companies have set goals of installing a total of 600 GW of additional solar and wind power during the 14th Five-Year Plan period. If fully implemented, China could hit its 1,200 GW solar and wind target by 2025, five years ahead of schedule. The tremendous growth in 2020 and 2021 shows that the Chinese wind industry can deliver on its Beijing Declaration pledge of 50+ GW of annual wind power installations.
It also demonstrates that wind power would bolster the country’s progress toward the goal of hitting peak emissions before 2030 and support a cost-efficient path to carbon neutrality by 2060. Based on China’s latest renewable energy development plans as well as the directive on power market reform, GWEC Market Intelligence believes that China will continue to lead global wind power growth in the decades to come.
The full report can be read here